School Finance Junk Science Study from Penn State Still Smells

Tom Shepstone
Shepstone Management Company, Inc.

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That school finance junk science study from Penn State has more than a few flaws, as it turns out, and the authors just can’t help revealing their biases.

I don’t label studies junk science lightly, especially when they’re from Penn State, my own alma mater. But, then again, this is the same university where Michael Mann works. You know…the hockey stick guy. A few weeks ago I reviewed a draft study and some related articles on school finances in Pennsylvania. And, yes, I believe it to be school finance junk science. As I noted then:

This data, of course, proves nothing other than the fact gas drilling has taken place in rural areas with less wealth, which is surely a surprise to no one and that is precisely why rural areas have wanted it…

This hyped up study, in other words, simply shows richer school districts have more revenue to work with and always have…

The hype in The Conversation and the Inquirer is of the worst sort; it essentially says a 200 pound man who gains three pounds is growing three times faster than a 10 pound baby who grew by one. It’s meaningless and apparently intended to help make a case for a severance tax. Don’t fall for it.

My little expose on school finance junk science and my argument got no response from the authors, but Ken Cuomo’s subsequent post did and it’s very telling.

You can read the authors’ response and judge for yourself but it’s a lengthy comment with not much substance. But, it does offer these revealing points to which I offer responses in red:

  • Our results report the difference, on average, in outcomes for rural districts that experienced unconventional drilling, relative to otherwise similar rural districts that did not experience unconventional drilling (including those lying south of I-80). [Notice the emphasis on “outcomes” and “similar rural districts.” But, the study, such as it is, never tells what districts those might be. The districts with gas drilling are easy to identify, of course, and the study even includes a map of them. But where are the “similar rural districts” supposedly used to measure the effect? The study refers to “fringe,” “remote” and “distant” rural districts without ever defining them. Finally, it’s important to note the study also found a positive effect on property taxes and only got a negative effect by counting all revenues.]
  • The superintendent states that “Last I knew, Pennsylvania residents are subject to Pennsylvania personal income tax on income from all sources.” This is in error as leasing royalty income is not subject to earned income tax. [The Superintendent did not say lease and royalty income is subject to the Earned Income Tax and it’s absolutely correct to say this income is subject to the Commonwealth’s income tax. Moreover, gas industry employee income is taxable under both taxes.]
  • We don’t advocate necessarily for a severance tax. Rather, our research poses the broader question regarding the relative distribution of risks and benefits associated with unconventional gas development and how we can empirically assess the outcomes of gas development for schools and communities. [When they say it’s not about the severance tax, it’s about the severance tax.]
  • We find it interesting that the Superintendent’s school district includes the town of Dimock, which unfortunately gained considerable visibility in the early years of the unconventional gas boom as a consequence of significant groundwater contamination associated with the gas industry. [How’s this gratuitous comment for a demonstration of bias?]

I’ve read this school finance junk science study several times now and it doesn’t smell any better over time. The authors will no doubt, say my comparisons aren’t apples to apples and their’s are but we’re offered nothing to truly demonstrate that.

Meanwhile, I have updated my table, looking at 2008-09 to 2017-19 (data easily available in one source for those years) and added some details.What these new tables show is that districts I examined from different drilling counties experienced real inflation-adjusted revenue gains per pupil of 16% to 44%. Here they are, including the updated figures for Elk Lake:

school finance junk science

Revenue per student up 30% over eight years in real dollars. (Susquehanna County)

Revenue per student up 16% over eight years in real dollars. (Lycoming County)

Revenue per student up 23% over eight years in real dollars. (Bradford County)

Revenue per student up 40% over eight years in real dollars. (Washington County)

Revenue per student up 44% over eight years in real dollars. (Wyoming County)

So, there you have it; five examples from the top five gas drilling counties in the Commonwealth, with average gains in real inflation-adjusted per pupil revenue of 2% per year to to 5.5% per year. We don’t need to know a lot more, do we?

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